by Alan Thornhill
Trend employment growth in Australia has eased.
The Bureau of Statistics reported today that this indicator, which the Bureau regards as the most reliable it produces, fell to just 2.2 percent in March.
That was down from 2.6 per cent in December last year.
On its more commonly used seasonally adjusted measure, the Bureau reported that the number of Australians with jobs rose by 26,100 in March.
That left the nation’s seasonally adjusted labour force participation rate for March at 64.9 per cent.
The Bureau said too that – on the same basis – the number of people unemployed fell by 7,300 during the month
This left Australia with a seasonally adjusted unemployment rate of 5.7 per cent for the month, 0.1 percentage points below the February level.
by Alan Thornhill
China is already Australia’s best customer.
However new research suggests it could be much better.
It also suggests that your business might well benefit.
The research, published by the Australia China Relations Institute points out that at 109 million in 2015, China’s middle class is already bigger than that in the United States.
Seventeen million bigger in fact.
So we can expect to sell more than iron ore and coal in future.
The Institute also says : “Australia’s ‘China Resources boom’ may have peaked but 57 cents in every dollar increase in Australian exports between 2009-10 and 2014-15 still came from China”
And it adds: “If managed well, Australia’s ‘China dining and services boom’ could run for decades.
There is much more on the Institute’s website at Australia China Relations.Org
Here, though, are some samples:-
In 2014-15 Australia’s agricultural exports to China stood at $9.0 billion
That was up from $3.7 billion in 2009-2010 and 72 percent more than to the US, our second largest customer.
In 2014-2015 Australia’s services exports to China stood at $8.8 billion.
This was up from $5.5 billion in 2009-2010 and 24 percent more than to the US, our second largest customer.
In 2015 more than one million Chinese tourists visited Australia spending $7.7 billion.
That was up from $3.3 billion in 2010 and more than double that of UK visitors in second place.
By 2020 Chinese tourist spending is forecast to reach $13 billion and account for 44 percent of the growth in total tourist spending to 2024-25,the Institute said.
It added:“ China’s middle class is no longer confined to the tier-one metropolises of Beijing, Shanghai, Guangzhou and Shenzhen.
By 2022 84 percent of the middle class is expected to live outside these cities.”
“In 2011 the only direct flights to Australia were from Beijing, Shanghai, Guangzhou and Shenzhen”
“ Now there are direct flights from 11 Chinese cities, including inland centres such as Chengdu, Chongqing, Wuhan and Xian.”
“ In 2015 there were 170,212 enrolments by Chinese students at Australian educational institutions, 2.4 times the number of students from India in second place
In 2013-14 the number of Australian student visa applications lodged from China’s traditionally less wealthy inland provinces was 12,345, up 30 percent from a year earlier.
“Those from coastal provinces stood at 23,805, up 24.6 percent.”
by Alan Thornhill
Barnaby Joyce’s imminent rise, to the post of Australia’s Deputy Prime Minister, is producing some apprehension in the nation’s capital, Canberra.
Not least on the issue of decentralisation.
Mr Joyce’s promotion became inevitable last week, when his National Party colleagues chose him to succeed the party’s previous leader, Warren Truss, who is retiring.
The National Party, now the junior partner in Malcolm Turnbull’s coalition government, was once called the Country Party.
And Mr Joyce retains its strong rural and regional focus.
That is reflected in his attitudes to decentralisation.
So no-one in Canberra was particularly surprised when plans to decentralise government scientific and other work to the Great Southern region, near Albany in Western Australia’s Great Southern region, Northam in that State’s Wheatbelt, or even to Tasmania, seemed to take on new life, with the announcement of Mr Joyce’s new job.
He doesn’t actually become Deputy Prime Minister, of course, until he takes the oath of office.
That is scheduled for Thursday this week,at Government House in Canberra.
Those looking for differences between Mr Joyce and Mr Turnbull, won’t have too much trouble finding them.
Mr Turnbull is, after all, a free-trader, right to the soles of his highly polished shoes.
There is something of a protectionist about Mr Joyce.
He would not shrink from a direct intervention in a market, if he believed that to be valuable.
All this is illustrated, clearly enough, in his attitude towards decentralization.
But he is clever about it.
Earlier this month, while announcing the relocation of three research organisations from Canberra to regional Australia, he said:”I have accepted proposals from three Canberra-based research and development corporations to increase their regional presence, which will boost jobs and growth in Dubbo, Wagga Wagga, Toowoomba and other areas.
“As well as being home to vibrant farming communities, these regions also have some of the best agricultural universities and research facilities in the country.
“It is logical that strong links should exist between the RDCs, universities and farmers on the ground in each industry.
“Being geographically closer to the industries they serve will strengthen their relationships and help the RDCs better understand their individual industry’s needs.”
There are limits to this kind of thing, of course.
Valuable knowledge, built up over years, in a sophisticated city like Canberra, which offers a wide range of educational and medical services, can be lost if a key scientist, chooses to leave a particular project, rather than accept a particular transfer.
And that whole process can become economically expensive, if adopted for political, rather than industrial reasons.
There are some fine questions of balance, here.
by Alan Thornhill
Ma1colm Turnbull’s enthusiasm for a higher Goods and Service Tax appears to be fading in the shadow of approaching Federal elections.
The Prime Minister has been careful, in the past, to remain non-committal on the idea, although he has confirmed that his government has been considering it.
That led Labor to mount what Mr Turnbull calls a scare campaign on the issue.
That, in turn, produced distinct unease among government MPs, particularly those in marginal seats.
However, in an ABC television interview, Mr Turnbull said his government would be looking to increase productivity with the tax reforms it would introduce in its May budget this year.
He said:” With the GST income tax swap proposal, it has not yet passed that first test and that’s the analysis that is being undertaken.”
This was, perhaps, the first time that Mr Turnbull has been so frank, on this subject.
But he set out the government’s objectives quite bluntly.
“… we have not made a decision on that yet,” he said“ and it does pose a lot of complexity.”
“ The objectives of this or any other tax change have got to be fairness, no increase in net taxes.”
“W don’t want to increase the total tax take….
“And it’s got to deliver a strong growth and jobs outcome,””otherwise it isn’t worth the trouble and expense of making the change.”
Mr Turnbull said the present proposals had not yet passed the first test in that regard.
by Alan Thornhill
The Reserve Bank sees stronger economic growth ahead – though not just yet.
In a revision to its latest statement on monetary policy published today, the bank said that – as expected – the Australian economy had grown at a “below average” pace over the year to September 2015.
It said this had been “the starting point” in calculating its latest forecasts – which include 3-4 per cent growth in the 12 months to the end of June 2018.
The Bank said that:“over the next few years, growth is expected to remain around its current rate, which is slightly below its decade average.”
But it expects things to pick up after that.
It added that:”Activity continued to shift from mining to non-mining sectors of the economy.”
“Services sector output grew by around 3½ per cent over the year to September, while goods-related output grew only modestly.”
The bank also noted that:” Mining investment continued to decline sharply, although this was partly offset by contributions from resource exports.”
“ Net service exports also made a significant contribution to growth, partly reflecting the effects of the exchange rate depreciation.”
“ Non-mining business investment was little changed over the year.”
The bank also said that dwelling investment continued to grow strongly
and consumption growth picked up to be close to its decade average.
But it added: “ Public demand grew at a below-average pace over the year.”
The bank also said:“The forecasts for iron ore and coal prices are lower, reflecting a weaker outlook for Chinese steel demand and an expectation that there will be only a limited reduction in global supply from high-cost miners, particularly those in China.”
by Alan Thornhill
Australia’s economic growth was glacial, even before the latest slow down in the growth of its best customer – China – was confirmed yesterday.
The latest national accounts from that country showed that its growth slowed to 6.8 per cent in the 12 months to the end of September.
While many countries would be delighted if they were able to chalk up a performance like that, China wasn’t.
This was, after all, the second lowest growth rate that China has seen, in the past 25 years.
What, though, will that mean in Australia?
In short, plenty.
The latest official figures put Australia’s economic growth, in the 12 months to the end of September, at just 2.3 per cent.
The contrast with China’s much higher growth is striking.
Yet even that 6.8 per cent figure was seen as disappointing because China had become used to reporting even higher growth rates.
And that, in turn, led to Chinese buyers placing ever bigger orders, as the years went by for Australian iron ore and coal.
That boom, in Australia, is now over.
So it will be that much harder in Australia, to avoid an economic slow-down – or even a recession – in the months ahead.
Especially as income growth in Australia has been tight over the past year over the past year.
The Statistician reports that average weekly earnings here grew by just 2 per cent, over the past year, while company profits fell by 0.7 per cent.
It is very hard, in times like these, to see shoppers spending at levels likely to produce anything like a robust economic recovery.
Especially as prices rose – by 1.5 per cent – in the 12 months to the end of September.
No wonder, then, that Malcolm Turnbull has been, looking for an escape route, down a path called innovation.
Many Australians, of course, are already ahead of the Prime Minister on that track.
They have moved, in particular, from traditional jobs in mining and other industries, to providing much needed educational and training services to workers from neighbouring countries.
China, too, has been switching,increasingly, from traditional pursuits.
In China’s case that has been low value factory work.
Economist Anthony Kelly, of the National Australia Bank, notes in a new assessment that China, one of the most successful adapters of the modern world, has also been forced, by changing circumstances, to move, instead, into the higher value service sector.
The lesson here, surely, is that no country can simply keep on doing what it always has done, while hoping, always, for stronger growth.
Economics is a bit more complicated than that.
by Alan Thornhill
Consensus on tax reform proved elusive when the Prime Minister, Malcolm Turnbull met State premiers and Territory leaders in Sydney today.
The State and Territory leaders went into the meeting of the Council of Australian governments seeking reversal of the $80 billion cuts to their health and education spending that flowed, ultimately, from the unpopular 2014 Federal budget.
Mr Turnbull, for his part, was seeking more stable revenue flows, as the mining boom subsided.
That led to the Federal Treasurer, Scott Morrison, ordering the Federal Treasury to model the likely impact of possible changes, including several that would include a higher Goods and Services Tax.
Although the Opposition has been warning that Mr Turnbull wants to impose a 15 per cent GST on “everything” in place of the present 10 per cent, a 12.5 per cent rate is now starting to look more likely.
But the Coalition remains determined to curb the big Federal deficits it inherited from its Labor predecessor,
Mr Turnbull opened today’s meeting by thanking the Premiers and Territory leaders for what he called “very collaborative discussion we had last night.”
He said:“We all understand that Australia’s economy is transitioning from an enormous mining construction boom.”
And added:”We recognise that we’ve seen a high rise in our terms of trade and as was always going to happen that has now subsided.
I think we all recognise that to ensure our continued prosperity we do need to be more competitive, more productive and more innovative.
However the COAG leaders did agree to keep on examining options for tax reform.
They also accepted a March deadline on their discussions.
”Mr Turnbull said after today’s meeting “there are many different options.”
“There are many different approaches and… ultimately what we need is a tax system for the 21st century.”
The Tasmanian Premier, Will Hodgman, said he was looking forward to putting some concrete proposals on the table by the proposed deadline of March next year.
Mr Hodgman said his focus was not to increase the tax burden.
“We believe that the better and more appropriate approach is to ensure that we use this discussion, which also has a very important element of understanding the inefficiencies in our systems,” he said.
ACT Chief Minister Andrew Barr said there are still some fundamental issues in the tax system that need to be addressed ahead of the looming deadline.
“Importantly, out of today was recognition from states and territories as well as the Commonwealth that this is a shared challenge,” Mr Barr said.
“But it’s one that the clock is ticking on and we can’t have another meeting like today in March.
“We have to start making decisions.”
by Alan Thornhill
Why is s that person at the back of the bus yawning?
After all, it’s only 8.15.
And he is clearly on his way to work.
Well, the Statistician might have provided at least part of the answer to that question today.
In new, experimental, information published today the Bureau of Statistics reported that no less than 1.9 million Australians were holding down at least two jobs, simultaneously, back in 2011-12.
That’s almost one in five.
Perhaps that fellow is one or them.
The Bureau said it had just released new experimental information on employee earnings and jobs, including data on multiple job holders.
“This is the first time that the ABS has integrated the Australian Taxation Office’s Personal Income Tax data and the
ABS’ s Expanded Analytical Business Longitudinal Database (integrated business data) ,” it said in a statement.
This had allowed it to produce linked employer-employee data.
The Bureau said this is an important first step towards a future ABS Linked Employer-Employee Database (LEED) which will contain data linked across the years.
“ The ultimate long-term goal is to enhance analysis on productivity, changes in employment by industry, the ability for people displaced from work to regain employment and other important Australian labour market issues,” the Bureau added.
However the Bureau admitted this would take time and require further investment.
“This release demonstrates the ABS’ commitment to innovate and deliver new information on the Australian labour market using administrative data,” Jennifer Humphrys, Director of Labour Market Statistics, at the ABS aid.
“Through integrating employer and employee data, we are able to measure for the first time that 1.9 million employees were multiple job holders (individuals with two or more concurrent jobs) in 2011-12,” it said.
The data also presents additional statistics on employees and earnings including that there were 10.3 million employees in 2011-12.
The median (1) earnings of these employees were $45,869 and the mean(2) earnings were $55,678. the Bureau added
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
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